The Effectiveness Of Material Flow Cost Accounting (Mfca) In Identifying Non-Product Output Costs And Its Impact On Environmental Performance In Paper Manufacturing Companies: A Case Study In Kwa-Zulu Natal

Mishelle Doorasamy ()

The Journal of Accounting and Management, 2014, issue 3, 51-69

Abstract: This paper analyses the effectiveness of adopting the Material Flow Cost Accounting (MFCA) approach to highlight non-product output costs and assist managers in their strategic decision making processes with regard to implementing cleaner production processes. Manufacturing companies spend large amounts of money investing in end-ofpipe- treatments in order to improve the environmental performance rather than adopting cleaner production technology and techniques. Cleaner production (CP) is perceived by management as a costly strategy that requires innovation with no financial returns to the company in the short-term. Conventional costing systems do not take into consideration the ‘true’ value of non-product outputs. A case study was performed on a paper and pulp manufacturing company in Kwa-Zulu Natal which provides evidence that MFCA technique highlights the value of non-product output costs enabling managers to assess the financial and environmental benefits of adopting CP techniques and technologies. The scope of this research was limited to the steam production process which generates large amounts of boiler ash containing approximately 20% of unburned coal. It had been concluded that the company should integrate MFCA with the current EMS system to ensure their future sustainability.

Keywords: Material Flow Cost Accounting (MFCA); Cleaner Production; Non-product output; Strategic decisions; innovation; sustainability (search for similar items in EconPapers)
Date: 2014
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